Now, let me preface by stating, IMO, DNDN looks like a cross between "Boom or Bust" and "Dogs of Biotech". Having said that, I assume you are Long, not short, and want a bullish play in options for one dollar or less. You said for "expense purposes". How about time horizon, Calls, Short Puts, Spreads?
No matter, if I thought DNDN was going to play up to 8.00 by August OPEX, I would definitely play the August Bull Call Spread 5's over 8's @ 1.05 or better. That places your BE @ 6.05 with a potential 1.95 profit(almost 200%) @ 8.00 or better @ Aug OPEX.
This limits the upside if DNDN runs to 40.00, to a max 1.95 profit, though. If that is your thought(boom) I would just buy the Aug 6.00 Call for 1.05. Cheap insurance, although a thrown away dollar if PPS @ Aug OPEX @ 6.00 or less.
BTW, I loathe diversification. IMO, Rule #1 is "trade what you know intimately" . The rest of the rules are a re-read of rule #1...;-)
First, thanks for taking the time.
I only used spreads once with gdx, it worked out ok. I does limit your potencial gain.
I chose the august one also.
For some reason i am able to be patient this year and not pull the trigger on my 42% cash position. I already have to much risk and a tad too complicated(to much diversification).
I don't think that stock is ideal to risk an option, i will wait for a market correction and then get some comon stock.
Can't go more simple than not doing anything...sorry if i wasted your time.
I will post ALL of my trades this year to you. Don't know why, but i will maybe because you toook a bite.
I am SURE we will both learn something, i have slightly different ways of doing things, including expressing myself, too outspoken. Not saying you will learn more at all.
i want to get bashed on my actual portfolio so here goes part I
lol, i know i won't get bashed on at least one.
x2 is double position more or less.
tot x2, bp, aapl x2 ,fte, ftr, agnc, arr, phys, pslv, clf, gdxj, gdx x2, vale, ve,
tiny position in gm , cytx , and tiny nok option.
I am looking for covered calls for gdx,vale,ve and tot , i can' on the others..
part II is more complex lol.if you're interested i'll tell.
to give you a more specific answer on the spread, it is very good BUT i don't think it can go up that much that fast due to overall market condition , i fear the markets deserve a Nice and juicy correction that would cost me bucket loads. :(
""... i don't think it can go up that much that fast due to overall market condition"
The thing about the spread is that you employ it WHEN you don't think the market is going to go up a great amount. You get the spread at a BE to the current PPS, so anything above the current PPS at OPEX is profit. Do you understand that part?
That spread I recommended at the time had a BE of 6.05. If we finished at Aug OPEX at today's PPS(6.50) you would make .45/spread. You could also close out the spread closer to OPEX for a lower profit, but nonetheless a profit. Employing the straight Call, you have more potential profit IF the PPS moves up greater than 8.00 PPS, but you have to overcome 1.05 of capital appreciation before you see the same gain as in the spread(baring spread divergence).
I cannot comment on your portfolio because I am not intimately familiar with any of your holdings other than the mReits, hence my 98% cash holdings all year, except short duration incisions into the market with options.